Zimbabwe announces it will print its own version of the U.S. dollar
This week, Zimbabwe’s central bank governor, John Mangudya, announced that the country will begin to print its own version of the U.S. dollar within the next two months. The creation of these notes, called “bond notes,” has been spurred on by a cash shortage in the country. In fact, as Voice of America reports, Zimbabweans have been restricted to daily withdrawal of $50 and, in some cases, they arrive at an ATM to find it closed. The new notes, which come in $2, $5, $10, and $20 denominations, are backed by the Africa Export-Import Bank for $200 million. Zimbabwe’s central bank also set a $1,000 limit on how much cash can be taken out of the country (down from $5000), as well as a $1000 limit on cash withdrawals. This introduction is not unprecedented: The central bank brought in U.S.-dollar-pegged “bond coins” of one, five, 10, and 25 cents in 2014 and 50 cents in 2015. Then, as now, the central bank has stressed that the introduction of these notes is not a return to its own currency, though many Zimbabweans have their doubts.
In 2009, after a long period of hyperflation, Zimbabwe got rid of its own dollar in favor of a multicurrency system. Since then, the U.S. dollar, the South African rand, Chinese yuan, and the British pound have become popular currencies. With this change, though, the central bank is encouraging the use of the rand, the second-most used currency (5 percent of transactions versus 90 percent by the U.S. dollar), because of the close trade ties Zimbabwe shares with South Africa.
IMF revises growth prospects for Africa and Moody’s downgrades four African countries
The International Monetary Fund released the Regional Economic Outlook for sub-Saharan Africa this week. This year, the report’s key message is “Time for a Policy Reset.” The fund states that policy responses to the current macroeconomic climate have been poor and that improved policies are needed. Such policies include implementing exchange rate flexibility, improving fiscal policies, and restructuring debt.
The report, published twice a year—in April and October around the Spring and Annual Meetings—highlights the risks and challenges the continent faces. The report predicts that this year, growth in the sub-continent will slow to 3 percent—below the 3.2 percent global average—down from 3.4 percent in 2015 and 5 percent in 2014. The slowing GDP growth is largely driven by the drop in commodity prices that oil-exporting countries continue to face. The year 2015 marked the largest 18-months decline in crude oil prices since 1970 as oil prices declined by more than 60 percent between 2013 and 2015. The decline in growth rates has also been seen in non-oil exporting countries such as Ghana and South Africa—Ghana has faced high external debt while South Africa continues to face a myriad of macroeconomic and political woes. Conversely, exceptions such as Kenya and Côte d’Ivoire are projected to grow at 6 and 7.6 percent, respectively, a growth largely driven by infrastructure investment and growing private consumption.
Last Friday, credit rating agency Moody’s cut the credit ratings of four oil-exporting African countries: Nigeria, Angola, the Republic of the Congo, and Gabon. Nigeria, Gabon, and Angola were lowered to B1, while the Republic of the Congo was lowered to B2. With declining revenues, governments have increasingly relied on borrowing in order to fuel budget deficits. On a positive note, Moody’s issued Nigeria a stable outlook on confidence, meaning that the rating is not likely to change in the near future.
On World Press Freedom Day, Africans discuss freedom of expression
Tuesday, May 3, marked World Press Freedom Day and provided an opportunity for reflection on global news media freedom, which reached a 12-year low in 2015 “as political, criminal, and terrorist forces sought to co-opt or silence the media in their broader struggle for power,” the Freedom House Freedom of the Press 2016 report suggests. Journalists face daunting challenges globally and in Africa, where they may be subject to harassment, imprisonment, and violence in their line of work. For example, the Washington Post told the story of Abdiqadir Dulyar, the director of the Somali TV station Horn Cable, who has faced multiple threats to his life and has received no protection from the state. In countries like Burundi, which is facing a political crisis, and Uganda, which held elections in 2016, the state has used violence and intimidation to silence journalists or drive them into exile. On Friday, Uganda also placed a ban on social media and live media coverage of protests opposing the re-election of President Yoweri Museveni.
Despite the immense risks facing some news media workers in Africa, a majority of Africans believe that the news media is still an effective institution and performs an important role in informing the public and holding governments accountable, according to an Afrobarometer report released for the occasion. The survey of 54,000 individuals in 36 African countries revealed that 54 percent of respondents think that the news media “should have the right to publish any views and ideas without government control,” and 59 percent said that it “is somewhat/very effective in revealing government mistakes and corruption.”